Later this week on the floor of the House of Representatives, several federal budget proposals embodying different approaches to our country’s economic challenges will compete for attention. One of those, the Congressional Progressive Caucus’s “Budget for All,” offers the most dramatic contrast between the effort by House Republicans to double down on the failed conservative policies of the past and a contrasting approach that is our only real hope for rebuilding the middle class and getting the nation out from under the specter of crushing debt.
We all should be rallying behind the Budget for All as a counter to the Budget for the 1 Percent that the House Republicans have put forward under the leadership of Budget Committee chairman Rep. Paul Ryan, R-Wis. Here are three reasons why.
The Budget for All will create jobs. The Republican Budget for the 1 Percent will kill them.
The Budget for All contains a long list of initiatives, more than $2 trillion worth, designed to put people to work doing jobs that need to be done, such as repairing schools, upgrading and expanding our transportation network, protecting our communities, providing health care and other services to those in need. The Republican budget would slash discretionary spending by $38 billion below the president’s request in 2013, and by $352 billion over 10 years, reducing the money available for a broad range of job-creating initiatives.
In the short term, the Budget for All would increase the deficit more than either President Obama’s proposed budget, and certainly more than the Republican budget. But it makes eminent sense to run a larger deficit now, when the economy is slack, borrowing costs are near zero, and unemployment is running well above 8 percent.
By contrast, the Republican budget starts by slashing and burning domestic spending, irrespective of the impact on the economy. The budget is based on two false premises: one, proven wrong during the Bush administration, is that cutting taxes on the wealthy leads to job creation for the middle class. It did not; the Bush administration’s economic growth period was the most anemic in terms of job creation of any economic upturn since World War II, and of course what little job growth that did take place was more than erased by the Bush economic collapse. The second false premise, being proved wrong in Europe, is that government austerity causes the private sector to grow. In fact, as governments slash budgets, parts of the Euro Zone are sliding toward a double-dip recession.
The Emergency Jobs to Restore the American Dream program in the Budget for All alone would put 2 million Americans back to work. That is on top of the millions of jobs created or maintained by a $556 billion surface transportation program, plus investments in clean energy. The Republican budget would cost the economy “roughly 1.3 million jobs lost in 2013 and 2.8 million jobs lost in 2014, or 4.1 million jobs through 2014,” economist Ethan Pollock of the Economic Policy Institute estimates.
The Budget for All does the most for deficit reduction — the right way.
The charts below say it all. The Budget for All would bring the annual federal deficit down to less than 1 percent of gross domestic product in 10 years, compared to 1.2 percent projected by the Ryan Republican budget and the 5.3 percent of GDP the deficit would be if we maintained the status quo for the next 10 years. The cumulative debt would be reduced to 62.3 percent of GDP in 10 years.
The Budget for All offers deficit reduction of $6.8 trillion in 10 years. Some of that deficit reduction comes through cuts in defense spending, with a goal of “a leaner, more agile force” to combat 21st-century threats, rather than basing defense budgets on a long-over cold war.
But what is particularly important in how this budget deals with deficit reduction is how it deals with taxes.
The Budget for All stands for progressive taxation. The Republican budget cuts taxes for the 1 percent and shifts economic burdens to the 99 percent.
The Budget for All proposes to maintain today’s tax rates—including the Bush 2001 and 2003 tax cuts—for the bottom 98 percent of taxpayers. But for people earning more than $1 million a year, the Budget for All would create new, higher tax brackets, up to 49 percent for those earning more than $1 billion. It would also enshrine into law the “Buffett rule,” taxing capital gains and other unearned income at the same rate as earned income.
The budget also includes “proposals to end manipulation of interest expenses of foreign subsidiaries, determine foreign tax credits on a pooling basis, crack down on transfers of intangible assets to tax havens, level the playing field between domestic and foreign insurers, and modify tax rules of dual capacity taxpayers, among others.”
The pillars of our economic success lie in such things as good schools, safe streets, clean water and air, an efficient transportation network—and people who have economic security. The Ryan Republican plan forfeits all of this in order to give the wealth and corporations a top tax rate of 25 percent, then cutting the economic supports out of the rest of the economy.
That is a path to ruin, not a path to prosperity. The Budget for All would still keep tax rates for the wealthiest Americans below what they were during much of the Reagan administration. But the budget priorities that would be funded by these taxes would support a growing economy with a broadening middle class. Wealth for everyone would increase, as it did during much of post-World War II America before conservative policies took hold.
Robert Borosage, co-director of the Campaign for America’s Future, sums it up this way:
“The Budget for All is a common-sense blueprint for America. Its first priority is to invest in putting Americans back to work and helping the economy recover. Then, over the course of 10 years, it brings the budget more into balance than either the House Republican budget or the administration’s budget. Finally, it does this with sensible priorities: calling on millionaires and billionaires to pay their fair share, cutting bloated Pentagon budgets, while protecting Social Security and Medicare. The Budget for All upholds the basic promises that Americans make to one another.
“The Budget for All exposes the folly of trying to achieve deficit reduction while offering the most affluent Americans trillions in top end tax cuts, as the Republican plan proposes. It exposes the lie that the country can’t afford to put people to work and still get our books in order. And it shows clearly that the nation can not only afford to protect Social Security and Medicare, but can’t afford not to.
“The Budget for All reflects the priorities of a majority of Americans in poll after poll. Those who oppose it trample both common sense and majority opinion. We urge its passage.”
The Budget for All is a platform for the kind of debate we must have in 2012, between the pathway to an economy that works for everyone and an economy that will only work for the Mitt Romney class. Call your member of Congress and ask them to vote for this budget. It does not matter whether it has a reasonable chance of being enacted. What matters is that its principles ought to dominate the debate over the future of the country.
Updated to include statement from Robert Borosage.